Boston Beer Company, founded in 1984 by charismatic founder Jim Koch and eversince a forerunner of the craft beer industry seems to have passed its peak. Growing competition within an industry that sees nearly two new entries of competitors every day makes it harder for market leaders to defend the own market position. And Boston Beer Co., the number two craft brewer in the U.S. has now reported the third consecutive quarter of sales and profit decline. Revenues fell $7.4 million or 3% in the second quarter as the number of barrels sold slid 4% to under 1.1 million. Over the first half of 2016, sales volume decreased by 5%. Following the weaker-than-expected results, the brewer further reduced its projections for the year and cut its annual earnings guidance.
According to figures released by The Brewers Association the number of operating U.S. breweries in 2015 grew 15 percent, totalling 4,269 breweries—the highest number at any time in American history. Throughout the year 2015, there were 620 new brewery openings and only 68 closings in the US. Despite a 13 percent rise in volume and a 16 percent increase in retail dollar value the remaining share of the market is harder to defend when the market becomes even more fragmented with new players covering every niche of the market.
In order to face the new unpleasant situation Boston Beer Co. recently hired Jonathan N. Potter a former LVMH (Louis Vuitton Moët Hennessy) and Diageo executive as chief marketing officer who is scheduled to join the company this month.
Eashwar Krishnanand his hedge fund firm Tybourne Capital seem to believe in the future of Boston Beer Company. They bought 152,202 shares since the end of the first quarter now owning 10.1% of the company with 911,613 shares.
Although officially Boston Beer is still be considered a craft brewer in fact it has more in common with industrial brewing groups like AB InBev or SABMiller, which will soon join to be one single company.
Initially Brewers Association's definition of a craft brewer meant a brewery with less than 25% of the craft brewery owned or controlled by mass brewers and an annual production of 2 million barrels of beer or fewer. With the growth of Boston Beer and others this limit has been adjusted meanwhile to 6 million barrels. If you would apply these rules to European and especially German breweries probably 95% of all would be considered craft breweries.
About Boston Beer Co.
The Boston Beer Company, Inc. is the second largest craft brewer in the United States only surpassed by D. G. Yuengling and Son in Pottsville, PA. In 2015, the company sold approximately 4.2 million barrels (4.9 million hectoliters) of its core brands. More than sixty beers are sold under the Samuel Adams or Sam Adams brand names, twelve flavored malt beverages under the Twisted Tea brand name, ten hard cider beverages under the Angry Orchard brand name, and over forty beers under four of the brand names of its subsidiary, A&S Brewing Collaborative LLC, under its trade name Alchemy & Science.
Boston Beer runs three breweries in Boston, MA, Cincinnati, OH and Breinigsville, PA. The Alchemy & Science Company-owned three smaller breweries are located in Los Angeles, CA (Angel City Brewery), Miami, FL (Concrete Beach Brewery), and Brooklyn, NY (Coney Island Brewery) . Furthermore the company operates an apple orchard and cidery located in Walden, NY.